HOW STRONG IS SERBIAN AGRICULTURE – COMPARATIVE ANALYSIS OF FEW AGRICULTURAL INDICATORS OF SERBIA AND ROMANIA

Abstract

Proportionally large share in gross domestic product, long-standing tradition and favorable climate conditions for organization of great deal of production lines in agriculture, have contributed to a fact that Serbian agriculture was awarded a status of development priority, and agriculture itself was recognized as one of potentially comparative advantages of domestic economy. It seems more certain that in near future Republic of Serbia shall become candidate for new member of EU, therefore it was quite interesting to conduct comparative analysis of few selected agriculture indicators of domestic agriculture with those realized in one of the states that recently approached EU (Republic of Romania was singled out as a country which borders Serbia, and that is also traditionally oriented toward agriculture production). Upon conducted analysis, current strength of national agriculture was estimated, followed by adoption of conclusions from a standpoint of possible expectations for approaching EU.

Keywords: agriculture, EU, Serbia, Romania, accession

INTRODUCTION

With the Paris Treaty[1] in 1951, followed by the Rome[2] and Maastricht[3] Treaty, and passing of the EU Constitution in 2004, and the last expansion in early 2007 (to EU-25 were joined Romania and Bulgaria), the European Union becomes an integrative form consisting of 27 countries from the European continent.

With total area of roughly 4,2 million km², and population of 499,7 million people, in 2009 according to the International Monetary Fund (IMF) estimates, Gross domestic product (GDP) of nominal value of about 11.806 trillion EUR was created. Same estimation shows that within EU-27 more than 60% of GDP is generated in the sector of services. Per capita GDP in 2008 was around 25.100 EUR, and rates of inflation in recent years vary in the range 1% – 3,7%. EU’s total foreign trade with non-member countries traditionally shows deficit, which in 2008 totaled about 242 billion EUR. Foreign trade exchange of the EU agricultural products has also seen a constant deficit, which in 2008 amounted to 11,7 billion EUR (total export of agricultural and agro-industry products was around 80,1 billion EUR, while import reached 68,3 billion EUR). Within the total number of able to work population in EU, only 9,6 % is unemployed.

Although the share of agriculture in EU-27 gross domestic product is below 3%, this sector is the principal source of income for around 20% of total population, which live in predominantly rural regions that would be devastated without its contribution. Moreover, agriculture and food sector are important part of EU economy, offering almost 15 million jobs (8,3% of total employment) and taking around 4,4% of total GDP. Strong processing industry (EU is the world’s largest producer of food and beverages) give total production estimated at 675 billion of EUR. Finally, self-sufficiency of the EU in basic agricultural products is vital, as from point of the wellbeing of its citizens, as well as for the political independence of all member states. Therefore, economic, social and political importance of agriculture is much greater than its share in GDP of the EU. Given the number of potential consumers, agricultural production and food processing industries have been since the establishment of the Union labeled ‘of vital interest’.

Rome Treaty also defines basic legislation guidelines in EU agriculture. As the basic principles of agricultural policy were identified: the uniqueness of the market (free movement of agricultural products within the EU territory); priority of the products from the EU (successful safeguard of the EU internal market is accomplished with the priority treatment of domestic products over imported); financial solidarity (Common agricultural policy (CAP) implementation costs are funded from the EU budget).

Romania and Bulgaria have entered the EU community on January 1^st 2007 (on June 22^nd, 1995 Romania has acquired the status of candidate country for EU membership). On the other hand, Stabilization and Association Agreement (SAA) between Serbia and EU officials was initialed in November 2007, and signed in April 2008.  Two most important obligations that Serbia took with signing of Stabilization and Association Agreement are establishment of free trade zone and harmonization of national legislative with EU laws. Free trade zone between Serbia and EU is created for six year transition period. Dead line for trade liberalization was estimated by ability of Serbian industry and agriculture to adjust free trade, as well with ending of started reforms. Serbia was committed to abolish in transitional period step by step all import taxes for goods from EU. On the other hand, EU documentary confirm free access of our products to its market. After minor issues of political nature, in late December 2009 the EU unfroze the trade agreement with Serbia and the Schengen countries dropped the visa requirement for Serbian citizens.

METHOD AND DATA SOURCES

It seems realistic to expect, based on past events and planned activities, to get candidate status for EU membership in close time horizon, and to eventually join the European Union by 2014. Looking Serbia from this aspect, it can be assumed that last year represents the same time marker that Romania had in 1994. Guided by this logic it would be interesting to see the selected parameters of Romania agriculture in the early nineties, and compare them with the same realized within the domestic agriculture in 2009, in order to evaluate by comparative analysis whether the national agriculture is ready to respond any eventual request made by the EU[4]. The performances of Romania agriculture in 2009 are also presented, in order to realize the extent of its progress in the past 15 years.

In terms of the research objective and available data sources, during the analysis standard statistical and mathematical methods were used. Generally applied method of study was „desktop study„. Most important aspects were presented tabular and graphically, and analyzed characteristics were presented in absolute and relative numbers. Methods used are in accordance with the research objective, so they provide a real image of the situation within the national agricultures.

During the paperwork writing all the available data sources were used, ranging from available statistical data of the Statistic offices of Republic of Serbia, Republic of Romania, EU and Food and Agriculture Organization (FAO), current literature, papers, publications and electronic databases. It should also be noted that the statistical evidence offered by National Statistic Offices, FAO and EU publications, related to the element performances in agriculture, is often not up to date, methodologically and value aligned with data from other relevant sources. This is the main reason for the possible value deviation, particularly for data that are results of estimates.

RESULTS

1. 1.      Basic macroeconomic characteristics of the Republic of Serbia and the Republic of Romania

Serbia covers an 88.361 km². According to the latest census it has 7.498.001 inhabitants. During the previous year, the GDP amounted to 31,511 billion EUR (4.304 EUR per capita). According to the estimates about 11,3% of GDP is created in the agriculture (almost 20% within the entire agro-complex). Despite the decrease in total GDP by 3,5%, compared to the year 2008, agriculture is the branch where the real growth in GDP is achieved. Irreplaceable share of agriculture in GDP and foreign trade exchange, and a large share of agriculture population in the total population, defines Serbia as a predominantly agrarian country, where over 75% of the territory is marked rural.

Part of budget funds assigned for agriculture, or the relevant Ministry amounted to 25,616 billion RSD (3,42% of total budget expenditure), while according to the Law on Budget for 2010 planned amount of these funds is 25,622 billion RSD (3,36% of total budget expenditure)[5].

On the other hand, our eastern neighbor, the Republic of Romania lies at 237.500 km². According to EUROSTAT, in the past 15 years the total population reduced from about 23 million people in 1994 to 21,5 million in 2008. Romania is also defined as a predominantly agrarian country, with a relatively large part of its territory marked as rural. The value of total GDP (at current prices) with just less than 40 billion USD in the late nineties went up to 137 billion in 2008. The share of agriculture in GDP in 2008 amounted to about 7,2%, while in 1998 it was around 16%[6].

1. 2.      Resources within agriculture

Agricultural production has strategic importance for Serbia, since it simultaneously provides the nutritional needs of the population, contributes to a large extent to the GDP, promotes foreign trade, solves the unemployment problem, initiates regional integration, improves the image of the state, etc. Serbia has a good geographic location, favorable climate, rich biodiversity and extremely fertile soil. Bearing this in mind, as well as for centuries-old tradition of agricultural production, it is not by chance that it is one of the key sectors of the overall development. Unfortunately, constant depletion of production resources in terms of chronic shortage of investments has greatly influenced the obsolescence of the material base and slowdown the overall development of local agriculture.

2.1.Land

Land is an objective production condition, along with climate, is the most important physical-geographical component of agricultural development. According to the official statistics, Serbia has 5,06 million hectares of agricultural land. In the structure of agricultural land 3,3 million ha (65,2%) occupy the arable land and gardens, around 0,25 million ha (4,9%) were orchards, 0,06 million ha (1,1%) vineyards, while the meadows occupy 0,62 million ha (12,2%) and pastures at about 0,84 million ha (16,6%). Surfaces under mentioned categories of land usage are not significantly oscillated in previous period.

Inefficiency in the use of land is reflected in relatively large areas of agricultural land in a state of neglected land (estimated to remain around 600.000 ha of uncultivated land each year) [7] and relatively small areas that are irrigated (irrigation systems cover about 190.000 ha, but function only on 75.000 ha, or on 1,8% of total agricultural land). European average is about 30% of arable surfaces under irrigation systems. Many countries that surround Serbia are in much better position according to observed parameter (in Bulgaria is irrigated around 1,2 million ha, in Greece 1 million ha, in Hungary 260.000 ha, etc.).

It has to be underlined also that according to the provisions of SSA, four years after its entry into force the competent republic authorities must enable EU citizens transactions of agricultural land under the same conditions that are valid for local population (potential consequences could be increased land price, as well as serious investments of multinational agro-food companies in the national agriculture).

According the data from Food and Agriculture Organization of United Nation (FAO) and national statistic, Romania disposed in 1994 with 14,8 million ha of agricultural land, of which 9,34 million ha (63,1%) was in the category of arable land. During the 15 year period there was a 9% reduction in total agricultural land (in 2008 Romania has 13,55 million hectares of agricultural land), with minimal structural changes (arable land and gardens 8,72 million ha, or 64% of total available agricultural land, orchards and vineyards 2,9%, meadows 22,7% and pastures 10,4% of the observed area). In 2007 out of 615.330 ha of irrigable area, irrigation is actively done on the 173.450 ha.

Although in Serbia is present trend of slightly decrease of agricultural surfaces per capita (around 0,68 ha per capita), land still has not belong to group of limiting factors of agricultural production. Similar situation is in Romania too, where this indicator is around 0,69 ha per capita. Main problem in Serbia could be unfavorable property structure and fragmented estates, as well as extensive land usage. In average husbandry has about 3,7 ha of agricultural, or 2,46 ha of arable land (in EU-27 average is around 12 ha with expressed variation among member states. Mentioned average is higher within E-15) what is insufficient for serious commodity production. In Romania, average husbandry has around 3,3 ha of agricultural land.

2.2.Forests

Forests are renewable natural resource of the multiple economic and social importance. Serbia has 2.429.642 hectares of forest complexes[8]. In relation to the total area, the percentage of forest cover is about 27,3%.

The total area under forests in Romania is about 6,5 million ha, and compared to the year 1994 was not significantly changed (6,37 ha). In relation to Serbia, the percentage of forest cover is almost identical, about 27,4%.

2.3.Hydrological conditions

Hydrology is an important element of natural resources. They define the water within the agricultural production as an essential element in the process of crops growing and livestock breeding, and processing industry of primary agricultural products. Hydrological potential of Serbia and Romania is embodied in the great natural watercourses, artificial hydro-systems, ground water flows and aquifers, and constructed water accumulations. Water is in most cases of favorable quality for drinking, irrigation and industrial use, and available in sufficient quantities.

2.4.The number of cattle

As in previous years, in 2009 in Serbia was evident the trend of decreasing of the heads number of most types of livestock. A mild increase in the heads numbers has been recorded only in goats, poultry and bee hive numbers, which is the influence of the specifics of these productions and real decline in purchasing power of domestic consumers, who protein need from the meat overcome by purchasing of cheapest substitutes.

Romania is characterized by the same trends within this period. The main reasons for decline of live stock breeding sector in both countries are: former state enterprises were too big and inefficient; weak competitiveness/productivity compared with the imported products; general lack of financial at private owners; aggressive policy against state enterprises from the former managers, without concrete restructuring strategy; no clear state policy for this sector; etc. On other hand, in both countries is present process of intensive correction of racial composition of all animal species, parallel with protection of autochthonous breeds.

Table 1. – Number of heads of livestock in Romania and Serbia, in observed years (in million)

No.	Type of livestock	Romania		Serbia – 2009.
		1994.	2009.
1.	Pigs	9,26	6,17	3,63
2.	Poultry	76,53	84,80	22,40
3.	Cattle	3,96	2,68	1,00
4.	Goats	0,78	0,90	0,14
5.	Sheep	11,50	8,88	1,50
6.	Horses	0,75	0,82	0,014
7.	Bee hives	0,76	0,99	0,30

Source: http://faostat.fao.org

2.5.Agricultural population and number of agricultural husbandries

According estimation rural parts of Serbia today inhabits around 3,3 million inhabitants. According to the Census of population, households and housing in 2002, total number of agricultural population is 817.052, or about 11% of the total population. Out of this number 529.236 inhabitants is economically active. Within the group of 287.816 supported persons, many of them take part in everyday activities within their family husbandries. Also, there is number of persons that found in agriculture additional activity to fulfill family budget.

Contrary to the official census, it is roughly estimated that today there are about 750.000 agricultural households (about one third of total households), where only about 418.000 households are with registered husbandry[9]. Among them in 2009, only about 80.000 husbandries had the right on subsidies (for at least 1 member the predicted contributions were paid).

In 2004 in Romania 45,1% of total population live in rural areas. Agriculture, hunting and forestry involved 12% of total population (63% of rural population), or 29% of total employment population[10]. Total number of husbandries has decreased from 4,48 million in 2003 to 3,93 million in 2007.

Table 2 – Number of agricultural holdings according total utilized area of agricultural land in Serbia and Romania

Farm category[11]	Number of farms	% in total number of farms	Utilized agricultural land	Average per one holding
Serbia – census 2002
Without land	6.288	0,8	0	0
Until 2 ha	354.029	45,5	347.252	0,96
2 – 5 ha	244.064	31,3	854.367	30,5
5 – 10 ha	131.438	16,9	957.719	7,29
10 – 20 ha	36.772	4,7	503.358	13,69
More than 20 ha	6.300	0,8	206.305	32,75
Total	778.891	100,0	2.869.000	3,68
Romania – 2005
Without land	13.4910	3,2	0	0
Until 2 ha	2.721.710	63,9	1.941.250	0,71
2 – 5 ha	1.014.110	23,8	3.160.590	3,12
5 – 10 ha	289.580	6,8	1.966.390	6,65
10 – 20 ha	65.910	1,6	849.620	12,89
More than 20 ha	29.950	0,7	6.028.580	201,3
Total	4.256.170	100,0	13.906.700	3,27

Source: Ševarlić M., Nikolić Marija (2007): Metodološka pitanja posedovne i socio-ekonomske strukture farmerskih domaćinstava u EU, Monograph – Međunarodna iskustva u tranziciji agrarnog sektora i ruralnih područja, DAES and Faculty of agriculture, Belgrade, Serbia.

Observing the structure of farms by total agricultural land use, in Romania can be noticed significantly higher prevalence of farms with smaller estate (up to 2 ha), as well as smaller total used land area of average household (3,27 ha).

Basic phenomena characteristic for the rural population in both countries are: expressed migratory processes, anility, the white plague phenomenon, bad educational structure and insufficient level of professional competence of farmers, etc. Despite good production potential, domestic agriculture is still generallz extensive, with frequent recessive trends, limited with sell odds and ends, small estates, small quantum and variable production quality, obsolete machines and technology, low productivity and bad production structure, mutual poor organization of producers, poorly developed funding mechanisms, poor functioning of the purchase markets, small presence of domestic producers in the international market, etc. Most of the above relates to agriculture in Romania.

1. 3.      Production indicators of agriculture

From the standpoint of agriculture, significant segment of economy, available natural and social resources of Serbia, should provide to agriculture epithet of the main lever of complete development. This will be feasible only in case of more active government relation within the process of creation of favorable conditions for its development.

Table 3 – Certain agricultural production lines in 2009 in Serbia

Agricultural product		Harvested area (in ha)	Total production (in t)	Yield (t/ha)
Cereals	Wheat	567.654	2.067.555	3,64
	Barley	95.377	302.527	3,17
	Maize	1.208.640	6.396.262	5,29
	Oats	35.396	73.640	2,08
	Ray	5.197	12.743	2,45
Industry plants	Oilseed rape	18.091	44.300	2,45
	Sugar beet	61.399	2.797.596	45,6
	Sunflower	157.337	377.549	2,4
	Ind. paprika *	1.500	3.500	2,33
	Hop	67	110	1,64
	Soybeans	144.386	349.193	2,42
	Tobacco	6.103	9.847	1,61
Vegetable	Potatoes	78.169	898.282	11,49
	Beans dry*	21.366	42.183	1,97
	Tomatoes	19.921	198.353	9,51
	Cabbage and brassicas	20.810	326.162	15,67
	Paprika	18.541	171.366	9,24
Fodder crops	Alfalfa °	188.008	1.114.846	5,9
	Clover °	116.953	543.813	4,5
	Silage maize °	26.758	586.919	21,9
	Meadow °	613.630	1.126.239	1,8
	Pasture °	810.916	471.043	0,6
Fruit	Apple	0,036	0,28	7,83
	Plum	0,20	0,66	3,3
	Sour cherry	0,038	0,10	2,8
	Grape	0,060	0,43	7,2
	Raspberry
Live stock breeding products	Cow milk	1,51 million t
	Eggs	1,03 million pcs
	Wool	2.403 t
	Honey	4.577 t
	Meat	Beef	100.199 t
		Sheep	24.517 t
		Pork	528.000 t
		Poultry	80.204 t

Source: http://faostat.fao.org * data for 2008. ° Institute for statistic of Republic Serbia, data for 2008.

Similar stance is in force for Romanian agriculture, where also exists strong influence of exogenous factors embodied by CAP, which can represent a limiting factor for complete development.

Table 4 – Certain agricultural production lines in 1994 and 2009 in Romania

Agricultural product		Harvested area (in million ha)		Total production (in million t)				Yield (t/ha)
		1994.	2009.	1994.	2009.			1994.	2009.
Cereals	Wheat	2,41	2,14	6,1	5,2			2,54	2,43
	Barley	0,78	0,51	2,1	1,18			2,72	2,3
	Maize	2,98	2,33	9,34	7,98			3,13	3,42
	Oats	0,33	0,20	0,50	0,30			1,49	1,47
	Ray	0,028	0,015	0,051	0,033			1,78	2,13
Industry plants	Rapeseed	342 ha	0,41	322 t	0,57			0,94	1,37
	Sugar beet	0,13	0,021	3,27	0,81			25,2	38,6
	Sunflower	0,58	0,76	0,76	1,10			1,31	1,44
	Ind. paprika	0,030	0,031*	0,027	0,033*			0,9	1,06*
	Hops	2.189 ha	456 ha	1.559 t	245 t			0,71	0,54
	Soybeans	0,064	0,048	0,10	0,08			1,55	1,75
	Tobacco	9.992 ha	850 ha	0,012	1.566 t			1,3	1,84
Vegetable	Potato	0,25	0,26	2,95	4,00			11,8	15,4
	Beans	0,032	0,030	0,037	0,022			1,17	0,7
	Tomato	0,044	0,049	0,72	0,75			16,1	15,4
	Cabbage and brassicas	0,032	0,048	0,71	1,00			22,0	20,7
	Paprika	0,017	0,020	0,16	0,24			9,7	12,3
Fruit	Apple	0,070	0,053	0,36	0,52			5,2	9,83
	Plum	0,080	0,075	0,38	0,53			4,8	7,1
	Sour cherry	–	–	–	–			–	–
	Grape	0,25	0,18	1,03	0,99			4,2	5,4
	Raspberry	1.500 ha	100 ha	2.300 t	2.200 t			1,5	22
Year/product		Total production
		1994.				2009.
Live stock breeding products	Cow milk	4,29 million t				5,21 million t
	Hen eggs	5,09 million pcs				5,95 million pcs
	Wool	25.141 t				17.700 t*
	Honey	9.820 t				19.937 t
	Year/product			Total production (in t)
				1994.			2009.
	Meat	Beef		258.000			155.199
		Sheep		74.500			70.682
		Pork		775.300			470.567
		Poultry		260.000			371.383

Source: http://faostat.fao.org * data for 2008

Looking on presented production performances, it could be noticed that Serbia has achieved in a number of agricultural production lines, or better results, or quite successfully compete to its eastern neighbor. Observation imposes conclusion that accession into EU has not crucially affect on improvement of existing technical and technological solutions of Romanian producers, from the aspect of produced volumes.

1. 4.      Foreign trade exchange of agriculture

For years, Serbian agriculture has realized foreign trade surplus, which was around 650 million USD in 2009. In comparison with 2008, foreign trade balance of agriculture increased for almost 30%.

The most significant foreign trade partners for products of primary agriculture and food industry Serbia found into EU countries (it has preferential status), Western Balkan Countries – WBC (signatories of multilateral free trade agreement – the Central European Free Trade Agreement – CEFTA) [12], Russian Federation, etc. In 2009, within the sector of agriculture is achieved export-import ratio of 148,7%.

Table 5 – Foreign-trade exchange of agro-food products in Serbia in 2009 (in million USD)

Parameter	Export	Import	Balance
Foreign-trade exchange – total	8.344,9	15.581,9	-7.237,0
Foreign-trade exchange of agro-food products – total	1.945,3	1.308,4	636,9
Share of agro-food products in total Foreign-trade exchange (in %)	23,3	8,4	*
Food and live animals	1.509,8	951,0	558,8
Live animals	56,6	23,3	33,3
Meat and preparations	64,5	52,2	12,3
Dairy products and eggs	64,3	27,0	37,3
Fish and preparations	5,4	101,1	-95,7
Cereals and preparations	477,3	72,7	404,6
Vegetable and fruit	453,1	280,9	172,2
Sugar, honey and confectionery products	158,6	37,8	120,8
Coffee, tea, spices	83,7	180,3	-96,6
Animal feed	61,6	53,8	7,8
Other food products	84,4	121,9	-37,5
Beverages and tobacco	248,2	190,8	57,4
Beverages	192,8	81,2	111,6
Tobacco and products	55,4	109,6	-54,2
Raw leather and fur	13,7	7,8	5,9
Oil seed	23,2	62,3	-39,1
Animal and plant raw materials	26,0	46,9	-20,9
Animal and plant oil and fat	124,4	49,6	74,8

Source: Serbian chamber of commerce

Products that dominated in total exports of agriculture during 2009 were mercantile maize (1,6 million t), mercantile wheat (201.614 t), refined sugar (182.048 t), beef meat with bones, fresh and chilled (2.649 t), edible sunflower oil (43.225 t), frozen raspberries and sour cherries, fresh apples, dried plums, etc.

In the structure of import of agricultural products during 2009, dominant share had raw coffee (36.000 t) and tobacco and tobacco products (6.500 t).

Table 6 – Foreign-trade exchange of agro-food products in Romania in 1994 and 2007, top ten products (in million USD)

No.	1994 – export		2007 – export
	Product	Value	Product	Value
1.	Pig meat	89,71	Cigarettes	181,53
2.	Sunflower oil	33,47	Sunflower seed	144,30
3.	Wine	18,69	Rapeseed	105,75
4.	Preparations of beef meat	11,71	Maize	102,75
5.	Soybean oil	10,90	Wheat	63,00
6.	Meat beef	7,39	Sunflower oil	47,80
7.	Maize	7,31	Pastry	42,20
8.	Cucumbers and gherkins	6,34	Beverage non-alcoholic	42,15
9.	Sunflower cake	6,34	Barley	36,47
10.	Mushrooms and truffles	6,32	Mushrooms and truffles	32,74
11.	Total export – top ten products	198,18	Total export – top ten products	798,69
No.	1994 – import		2007 – import
	Product	Value	Product	Value
1.	Food prep nes	49,31	Pig meat	288,90
2.	Soybean cake	47,84	Food prep nes	259,09
3.	Cotton lint	45,45	Maize	170,88
4.	Sugar raw	43,10	Chicken meat	170,12
5.	Chicken meat	38,77	Pork	149,11
6.	Barley	35,76	Wheat	149,10
7.	Cigarettes	35,75	Tobacco	134,03
8.	Chocolate	27,28	Bananas	101,26
9.	Sugar refined	23,67	Sugar raw	97,03
10.	Soybeans	19,18	Pastry	92,27
11.	Total import – top ten products	366,11	Total import – top ten products	1.611,79

Source: http://faostat.fao.org

In 2007, Romania accomplished deficit in foreign trade exchange with agro-food products in amount of 747 million EUR. Within total import agriculture participated with 7,1%, and in total export with 4%. It could be noted that Romania in previous period of exporter has become a net importer of mentioned products.

1. 5.      Agricultural legislation, credits, Foreign Direct Investments (FDI), pre-accession funds and Common Agricultural Policy (CAP)

Previous year was characterized by increase of activities in the field of establishment of new legislation related to agricultural production and areas that directly or indirectly rely on it. In wide range of adopted laws and by-laws, by which national legislator expressed its readiness to manage the sustainable development of society, economy and environment in compliance with relevant international directives and standards, following documents are underlined: Law on agriculture and rural development, Law on amendments to the Law on agricultural land, Law on food safety, Law on livestock breeding, Law on genetically modified organisms, Law on plant protection, Law on protection and sustainable usage of fish stock, Law on animal welfare, Law on public warehouses for agricultural production, Green package – set of 16 laws from the area of environmental protection, Law on protection of competition, etc.

Also, during 2009 Ministry of Agriculture, Forestry and Water Management established a number of regulations concerning the subsidization of certain agricultural production lines, among which stand out: Regulation on conditions and way of usage of funds for production materials subsidizing for crop and vegetable production in 2009; Regulation of milk premium for 2009; Regulation on usage of funds for rural development support through the increase of competitiveness of agriculture; Regulation on usage of financial incentives for establishing of production and seedlings plantations of fruit, vine and hop in 2009; Regulation on conditions and way of usage of funds for insurance costs subsidizing for animals, crops and fruits in 2009; Regulation on conditions and way of usage of funds for mineral fertilizers subsidizing for fall sowing in 2009; etc.

In March 2009 the Government of Republic of Serbia established a program of measures for agricultural production support by crediting in 2009. Regulation has enabled to all registered farms availability of two models of crediting: a) subsidizing of interest at short-term loans given to agricultural husbandries b) Long-term loans for agricultural and food production. Loans are granted in branch offices of all commercial banks that have signed contract with the Ministry of agriculture (21 banks).

In order to simplify systems for outside assistance and maximize the impact of funds dedicated to candidate and future candidate counties, EU Commission made decision to replace all previous pre-accession funds (PHARE, ISPA, SAPARD, CARDS) by new one instrument – Instrument for Pre-Accession Assistance (IPA). It defines volume and type of support intended for Western Balkan Countries in the period 2007-2013 (support consists of 5 components: transition assistance and institution building, cross border cooperation, regional, human resources and rural development).

Serbia may benefit especially from first and second component in the period 2007-2010 (it may utilize around 584 million EUR). If Serbia becomes candidate country until 2012 it may utilize approximately 1 billion EUR of EU assistance. Although it represents non-refundable aid, beneficiary country has to contribute a certain share from its national budget for realization of each funded project.

Starting from 2004, the major foreign investors (mostly from EU) started to invest more in South Eastern European Countries. About 12 billion USD were invested in 2005, and Romania got more than 51% of that sum. During the 2006, as FDI Romania attracts about 11,4 billion USD, and in 2008 about 9,3 billion EUR. How there was no interest to invest in agriculture, tourism and constructions only about 10% from the total FDI were directed to agro-food sector.

Table 7 – The Romanian agrifood sector – attractiveness for foreign investors

Share of total FDI in p eriod 1990-2005	Agriculture	Food industry
Number of investors (%)	3,6	5,3
Value of investments (%)	1,2	9,4

Source: NOTR Database

 

Total sum of FDI in Serbia has varied from year to year. Observing the last decade, the sum of FDI ranged from just 50 million USD in 2000, up to maximal 4,4 billion USD in 2006[13]. As in Romania, small part of FDI is directed to agro-sector (0,6% to agriculture and about 14,1% to processing industry).

 

According to official literature, EU Common Agricultural Policy (CAP) overall spending is split between Pillar 1 – market related (direct aids and market interventions) and Pillar 2 – (rural development) expenses. Main priorities of CAP are to ensure: food quality and safety; environment and animal welfare; competitiveness; and sustainable rural communities.

Before all, considering total EU budget (present financial framework, 2007-2013) the total commitment appropriations for whole period were settled at the level of 864,2 billion EUR. Total EU budget for 2009 was 133,8 billion EUR.

Since the implementation of CAP in 1957, it has had a significant influence on the EU budget revenues and expenditures. Although there has been constant decrease in CAP expenditures in last three decades, CAP spending still represents considerable part of EU budget.[14] In same period CAP has been reformed few times, partly with the aim of better targeting and control of needed expenditures.

As CAP operates within a set of strict parameters, budgetary limits are established to control expenditure in any one year or period of year. The limits envisaged for CAP within the period 2007-2013 does not allow any increase, so CAP expenditures has been frozen until 2013. In 2009 total agricultural budget was 56,12 billion EUR (41,9% of total EU budget, or less than 0,5% of total EU GDP). It was shared in portion 73,3% for market oriented expenditures and direct aid, 24,3% for rural development and 2,4% for other expenditures.

Financial support from CAP for the Romanian agriculture in three year period (2007-2009) was 4,04 billion EUR. Total sum was shared in next portion: 60% for rural development, 22% for direct payments and 18% for market support.

Having Serbia in focus, potential question could be – is EU agricultural and rural development policy suitable for Western Balkan Countries, considering that within EU agricultural sector is mostly spending part of economy, while in WBC this sector generally represent earning part of economy.

Also, it would be interesting to set out general positive expectations and negative consequences on which Serbian agriculture can count, together with nomination of candidacy for entrance within EU membership.

Among the negativities that would be burdened Serbian agro-sector next one are stressed: increase of import and growth of total trade deficit (surplus neutralization in trade with agricultural products); constant exhaustive negotiations with the European Commission about assigning of favorable quotas and better personal benefits within the CAP; reduction in customs revenues; expressed costs of Serbian agriculture adjustment to growing competition from the EU (costs of companies restructuring and liquidation, costs of environmental protection standards harmonization with EU standards); growth of social expenses (growth of unemployment in initial stages of national market opening); etc. On the other hand, legislative body of EU is under constant pressure by questions: would the farms in candidate countries and new member states remain competitive; would the market in mentioned countries be flooded by products from EU-27; would community financial support in these countries be sufficient.

In contrary to aforesaid Serbian agriculture can expect following benefits with the accession to EU: increased inflow of FDI in agriculture and food industry; stable and transparent institutions; long-term, contractual preferential access to EU market (export growth, integration into the EU economy and better access on a 500 million consumers market); restructuring and modernization of the agribusiness sector; increase the level of support for agricultural incomes; better choice of goods and services for domestic producers; increase of national production competitiveness (improved quality of products); decrease in agricultural and increase in other aspects of employment in second phase of process of national market liberalization (strengthening of private sector and creation of new jobs, due to growth of export and service sector); diversity the forms of agricultural activity in rural areas; improve the trade balance for agro-food products; stability of agricultural policy[15] and market (agricultural prices); concentration of agricultural production within large commercial farms; etc.

CONCLUSION

By comparing of production potentials and achieved results within agriculture of Republic of Romania and Republic of Serbia, it is noticed that Romanian agriculture was accomplishing during the nineties and in last fifteen years, or similar parameters as Serbia had, or by them was still behind.

Having agriculture in focus, it would be wrong to conclude abruptly that Serbia possess all necessary attributes that could qualify it for obtaining, at first of all, status of candidate country, and later status of full member of EU. As it was mentioned, nomination for entry into the EU community is usually delegated by political position that observes agriculture as secondary segments of potential candidate economic system.

Also, aggravating circumstance for Serbian agriculture could represent time of possible candidacy and accession into EU. Romania has gone through this process in years that precede the global economic crisis, when the EU disposed with much larger funds for economic support to potentially new member states.

Additionally, desired entry of Serbia within EU, at best, could be happened during 2014, parallel to the start of new EU budget framework, as well as new CAP framework, when could be set one crucial question – what kind of assistance, or prior, what limitations Serbian agriculture have to meet.

REFERENCES

[1]            Agricultural statistics (main results 2007/08), edition 2009, Eurostat, European Commission, Belgium. http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-ED-09-001/EN/KS-ED-09-001-EN.PDF

[2]            Alexandri, C., Davidovici, J., Gavrilescu, D. (2004): Tratat de economia agriculturii, Academia Romana, IEA, Bucharest, Romania.

[3]            Analiza makroekonomskih i fiskalnih kretanja u 2009, http://www.mfin.sr.gov.yu

[4]            Bernardoni, P., Živkov, G. (2010): State support to agriculture producers in the WBC – a comparative analysis of CAP approaches, subsidies and programs, Presentation at summer school and workshop – Perspectives on the agro-food sector in Serbian and WBC, Belgrade, Serbia.

[5]            Bogdanov Natalija (2008): Small rural households in Serbia and rural non-farm economy, UNDP, DAES, Belgrade, Serbia.

[6]            Boussard, J., M. (2007): The future of the CAP pillar 1 – a new philosophy, http:// http://www.ivry.inra.fr/mona/publications_chercheurs/Textes-Publis/JMB_Athens-12-2007.pdf

[7]            Cvijanović, D., Katić,B., Vuković, P. (2009): Serbia at the gates of the EU -comparative analysis, Monography – Certain aspects of structural change in rural areas – the experiance of selected countries, IERIGZ, Warsaw, Poland.

[8]            Djuric, I. (2009): The EU’s agricultural budget – development and future, Faculty of agricultural science Gottingen, Germany

[9]            Europe in figures – Eurostat yearbook 2010, EC, EU, Belgium. http://epp.eurostat. ec.europa.eu/cache/ITY_OFFPUB/CH_01_2010/EN/CH_01_2010-EN.PDF

[10]        External and intra-EU trade – a statistic yearbook, 2009 edition, Eurostat, 2010.http://epp. eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-CV-08-001/EN/KS-CV-08-001-EN.PDF

[11]        Gavrilescu, D., Voicilas, M. (2007): The Romanian agro-food sector – how well is it prepared to join EU, IAE, Bucharest, Romania.

[12]        Jeločnik, M. (2009): Karakteristike organizacionih oblika subjekata u poljoprivredi, Master thesis, Faculty of agriculture Novi Sad, Serbia.

[13]        Kapor, P. (2009): FDI in agriculture, Economics of agriculture no 2/2009, IAE, Belgrade, Serbia.

[14]        Moussis N. (2009): Access to European Union: law, economics, policies, European study service, Rixensart, Belgium.

[15]        Osnovni indikatori makroekonomskih kretanja, http://www.mfin.sr.gov.rs

[16]        Popis stanovništva, domaćinstava i stanova u 2002 godini, 2003, Statistical office of Republic of Serbia, Belgrade, Serbia.

[17]        Puškarić A., Jeločnik M., Subić, J. (2010): Obeležja trgovine agroindustrijskim proizvodima u EU, ICAEDAR, Bucharest, Romania.

[18]        Officila gazzete of RS no. 41/09, no. 36/09. and no. 51/09.

[19]        Spoljnotrgovinska razmena poljoprivredno-prehrambenih proizvoda u 2009, http://www.pks.rs

[20]        Statistički godišnjak Republike Srbije za 2010, Statistical office of Republic of Serbia, Belgrade, Serbia.

[21]        Subić, J., Simonović, Z., Mihailović, B. (2009): Comparative review of Romanian agriculture in pre-accessing period, Ekonomika, Niš, Serbia.

[22]        Ševarlić M., Nikolić Marija (2007): Metodološka pitanja posedovne i socio-ekonomske strukture farmerskih domaćinstava u EU, Monograph – međunarodna iskustva u tranziciji agrarnog sektora i ruralnih područja, DAES and Faculty of agriculture, Belgrade, Serbia.

[23]        The CAP explained, http://ec.europa.eu/agriculture/publi/capexplained/cap_en.pdf

[24]        Ulrich K., Vlade Z. (2009): Trgovina poljoprivredno-prehrambenim proizvodima – principi i politika, University in Belgrade, Faculty of agriculture, Serbia.

[25]        Zakon o budžetuRepublike Srbije za 2010, Official gazzete of RS no. 107/2010

[26]        Zakon o budžetu Republike Srbije za 2009, http://www.mfin.sr.gov.rs

[27]        http://capreform.eu/new-cap-spending-figures-show-raw-deal-for-new-member-states/

[28]        http://ec.europa.eu/budget/index.htm

[29]        http://europa.eu

[30]        http://epp.eurostat.ec.europa.eu

[31]        http://faostat.fao.org

[32]        http://www.seio.gov.rs/code/navigate.asp?Id=409

[33]        http://www.agropress.org.rs/tekstovi/10616.html

[34]        http://www.srbijasume.rs

[35]        webrzs.statserb.sr.gov.rs

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[1]Treaty signed among Belgium, France, West Germany, Italy, Luxemburg and Holland had established European Coal and Steel Community (ECSC). This key document of postwar Europe was connected countries big coal and steel producers into one group with common authority under heavy industry management.

^[2]By Rome Treaty from 1957 was established European Economic Community (EEC), customs union among Belgium, France, West Germany, Italy, Luxembourg and Holland, basis of common market and free movement of people, goods, services and capital.

^[3] With this Treaty, which came into effect in November of 1993, was established EU, integration that from mostly economic develop into politic integration. It covers systems which regulate common external and internal policy, security, justice and monetary unity of member states.

^[4] Often, candidacy of some country for accession into EU community is politic decision, which agriculture and agro-complex observed as periphery part of economic system of potential candidate.

^[5]Noticeable is the disproportionately small allocation within agriculture, in compare with its impact in total GDP creation and socio-economic importance for complete economy.

^[6]Share of agriculture in GDP has declined since 1990, stabilizing at about 11-13% after 1999.

^[7]The causes of this phenomenon are intensive depopulation of rural areas and weak economic effects of agricultural production. However, by this was done good natural conservation of mentioned land, what qualifies it into the production potentials of organic agriculture.

[8]Despite the fact that public and private ownership are almost equal, more than 90% of forest fund is under constant monitoring of public company Srbija šume.

^[9]According the Organisation for Economic Co-operation and Development (OECD), in rural regions of Serbia there are 1.365.000 households (54% of total number of households) and about 583.000 of them (43%) have a farm holding.

^[10] During 2007 in agriculture were worked 2,84 million of inhabitants (13,2% of total population).

^[11]For easier comparison, farms are distributed in 6 interval groups.

[12] In the structure of total export common share of EU and CEFTA countries is around 94%.

[13] In 2007 total sum of FDI was 2,2 billion USD.

[14] Share of CAP in EU budget was decreased from 75% in 1979, via 70% in 1985, 64% in 1990 and 46,2%in 2005, to 41,9% in 2009.

[15] Although Serbia already has key documents perfectly harmonized with CAP, as they are Strategy of rural development for 2010-2013, The national agricultural program of the Republic of Serbia 2009-2011, Law on agriculture and rural development, until now they are still waiting on adequate implementation.

Autori: Marko Jeločnik, Lana Ivanović,Jonel Subić

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